MRO Magazine

UFPI Reports Record Net Earnings: $25.6 Million for the Quarter; $61.7 Million Year-to-Date


October 14, 2015
By Business Wire News

GRAND RAPIDS, Mich.

Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record-breaking 2015 third-quarter results. The Company posted the best third-quarter earnings in its history with net earnings attributable to controlling interests of $25.6 million, an increase of 32.9 percent over the same period of 2014. It also posted the highest year-to-date net earnings in its history, at $61.7 million. Earnings per diluted share were $1.26 in the third quarter of 2015, up from $0.96 in the third quarter of 2014. Net sales of $762.3 million for the third quarter were up 6.8 percent over the same period of 2014.

“I want to thank the members of the Universal family, who are motivated to succeed. One measure of accomplishment is breaking performance records—and that’s what they did,” said CEO Matthew J. Missad. “It took us ten years–surviving a downturn and rebuilding our company with a more diversified and balanced business. Now, our goal is to build on this strong performance.”

“This quarter was about executing our plan and serving our customers well,” Missad added. “We continued to enhance our product mix with new and value-added products, to buy opportunistically, to keep a close eye on costs and efficiencies, and to maintain a disciplined approach to capital allocation. This will be a priority for us no matter how successful a quarter or year might be.”

Missad noted that year-to-date sales of new products at the end of the third quarter were $181.2 million versus $143.6 million at the same time last year. The Company’s stated goal is $250 million in annual new product sales by the end of 2017.

The Company saw strong unit sales in each of its markets, although sales dollars were impacted by a lumber market that was down 17.6 percent in the third quarter from the same period of 2014. By market, the Company posted the following third-quarter gross sales results:

Retail: $295.3 million, up 9.2 percent over the third quarter of 2014: The Company saw increased unit sales to this market, particularly to big box customers, thanks in large part to market share gains and enhanced product mix. These results correspond to healthy increases in U.S. same-store sales reported by big box customers in their most recent quarters.

Industrial: $236.0 million, up 10.9 percent over the third quarter of 2014: The Company’s results in this market are attributable to a healthy blend of factors: strong performance by acquisitions, growth with existing customers, and the addition of approximately 130 new customers in the quarter, excluding the impact of recently acquired businesses. In August 2015, the most recently reported month, industrial production in the United States was 0.9 percent higher than the same period of 2014.

Construction: $241.8 million, up 0.7 percent over the same period of 2014: In this market, the Company saw the greatest gains in unit sales in the commercial and infrastructure construction space—a 16 percent increase over the same period of 2014. This remains another area of strong opportunity for growth. The Company continues to focus its residential construction efforts in geographic areas of anticipated stable growth and recently added capacity in these markets.

CONFERENCE CALL

Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, October 15, 2015. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at (877) 703-6105 and internationally at (857) 244-7304. Use conference pass code 12126975. The conference call will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. A replay of the call will be available through November 15, 2015, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 19282240.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company with subsidiaries throughout North America and in Australia that supply wood, wood composite and other products to three robust markets: retail, construction and industrial. The Company is headquartered in Grand Rapids, Mich., and is celebrating its 60th year in business. For more information about Universal Forest Products, Inc., or its affiliated operations, go to www.ufpi.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company’s reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.

 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2015/2014
   Quarter Period  Year to Date
(In thousands, except per share data)  2015      2014      2015      2014    
             
 
NET SALES $ 762,275 100 % $ 713,489 100 % $ 2,233,470 100 % $ 2,040,239 100.0 %
 
COST OF GOODS SOLD   651,569   85.5   623,903   87.4   1,930,739   86.4   1,787,652   87.6
 
GROSS PROFIT 110,706 14.5 89,586 12.6 302,731 13.6 252,587 12.4
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 67,951 8.9 59,936 8.4 198,087 8.9 172,835 8.5
ANTI-DUMPING DUTY ASSESSMENTS 1,600 0.1
NET (GAIN) LOSS ON DISPOSITION AND
IMPAIRMENT OF ASSETS   230     (2,570 ) (0.4 )   68     (3,418 ) (0.2 )
 
EARNINGS FROM OPERATIONS 42,525 5.6 32,220 4.5 104,576 4.7 81,570 4.0
 
OTHER EXPENSE, NET   924   0.1   552   0.1   3,118   0.1   1,963   0.1
 
EARNINGS BEFORE INCOME TAXES 41,601 5.5 31,668 4.4 101,458 4.5 79,607 3.9
 
INCOME TAXES   14,718   1.9   11,176   1.6   36,887   1.7   29,000   1.4
 
NET EARNINGS 26,883 3.5 20,492 2.9 64,571 2.9 50,607 2.5
 
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST   (1,327 ) (0.2 )   (1,258 ) (0.2 )   (2,876 ) (0.1 )   (2,369 ) (0.1 )
 
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 25,556   3.4 $ 19,234   2.7 $ 61,695   2.8 $ 48,238   2.4
 
 
EARNINGS PER SHARE – BASIC $ 1.26 $ 0.96 $ 3.06 $ 2.40
 
EARNINGS PER SHARE – DILUTED $ 1.26 $ 0.96 $ 3.06 $ 2.40
 
COMPREHENSIVE INCOME 24,305 20,001 60,365 49,722
 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST   (445 )   (1,317 )   (1,578 )   (2,183 )
 
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $ 23,860   $ 18,684   $ 58,787   $ 47,539  
                                 

SUPPLEMENTAL SALES DATA

Quarter PeriodYear to Date

Market Classification

20152014

%

20152014

%

Retail $ 295,350 $ 270,516 9 % $ 901,454 $ 818,871 10 %
Industrial 236,023 212,906 11 % 687,251 589,892 17 %
Construction   241,835     240,203   1 %   677,112     661,271   2 %
Total Gross Sales 773,208 723,625 7 % 2,265,817 2,070,034 9 %
Sales Allowances   (10,933 )   (10,136 )   (32,347 )   (29,795 )
Total Net Sales $ 762,275   $ 713,489   $ 2,233,470   $ 2,040,239  
           
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2015/2014
               
(In thousands)
ASSETS  2015  2014  LIABILITIES AND EQUITY  2015  2014
 
CURRENT ASSETSCURRENT LIABILITIES
Cash and cash equivalents $ 61,328 $ 26,184 Cash overdraft $ $
Restricted cash 1,139 720 Accounts payable 101,117 99,008
Accounts receivable 273,737 257,235 Accrued liabilities   113,184   93,933
Inventories 288,209 273,665
Other current assets   23,112   27,591
 
TOTAL CURRENT ASSETS 647,525 585,395TOTAL CURRENT LIABILITIES 214,301 192,941
 
OTHER ASSETS 8,934 16,227LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 200,929 168,825CAPITAL LEASE OBLIGATIONS 84,722 84,700
PROPERTY, PLANTOTHER LIABILITIES 56,757 42,758
AND EQUIPMENT, NET   254,530   245,036EQUITY   756,138   695,084
 
 
TOTAL ASSETS $ 1,111,918 $ 1,015,483TOTAL LIABILITIES AND EQUITY $ 1,111,918 $ 1,015,483
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2015/2014
(In thousands)    2015  2014
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net earnings $ 64,571 $ 50,607
Adjustments to reconcile net earnings attributable to controlling interest
to net cash from operating activities:
Depreciation 28,013 24,241
Amortization of intangibles 2,730 1,743
Expense associated with share-based compensation arrangements 1,351 1,445
Excess tax benefits from share-based compensation arrangements (33 ) (2 )
Expense associated with stock grant plans 85 81
Deferred income taxes (credit) (269 ) 127
Equity in earnings of investee (283 ) (246 )
Net (gain) or loss on sale of property, plant and equipment 68 (3,418 )
Changes in:
Accounts receivable (76,723 ) (76,642 )
Inventories 51,068 14,754
Accounts payable and cash overdraft 10,864 25,078
Accrued liabilities and other   39,967     32,760  
NET CASH FROM OPERATING ACTIVITIES 121,409 70,528
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (36,506 ) (31,676 )
Proceeds from sale of property, plant and equipment 2,682 6,463
Acquisitions, net of cash received (2,584 ) (7,135 )
Purchases of noncontrolling interest (1,256 )
Advances of notes receivable (4,403 ) (2,229 )
Collections of notes receivable and related interest 8,784 983
Cash restricted as to use (734 )
Other, net   180     (95 )
NET CASH FROM INVESTING ACTIVITIES (33,837 ) (33,689 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 297,340 192,475
Repayments under revolving credit facilities (311,253 ) (192,475 )
Debt issuance costs (11 ) (11 )
Proceeds from issuance of common stock 960 297
Dividends paid to shareholders (8,050 ) (1,710 )
Distributions to noncontrolling interest (3,159 ) (4,214 )
Repurchase of common stock (800 ) (4,772 )
Excess tax benefits from share-based compensation arrangements 33 2
Other, net   (300 )    
NET CASH FROM FINANCING ACTIVITIES (25,240 ) (10,408 )
 
Effect of exchange rate changes on cash   (1,004 )   (247 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 61,328 26,184
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD        
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 61,328   $ 26,184  

Universal Forest Products
Lynn Afendoulis, (616) 365-1502
Director, Corporate Communications